By-product elimination by substitution is a procedure for avoiding co-product allocation in Life Cycle Assessment by eliminating by-products as activity outputs and instead including them as negative inputs to the system. This approach accounts for the displacement effect that by-products have when they substitute for determining products from other activities.
The core principle of by-product elimination by substitution is to recognise that when an activity produces a by-product that can displace another product in the market, the environmental burdens associated with producing that displaced product should be credited to the system generating the by-product. Rather than partitioning the environmental impacts of the original activity between its various outputs through allocation, this method expands the system boundary to include the consequences of the by-product's availability.
In practice, this is implemented by treating the by-product as a negative input. For example, if a process produces electricity as a by-product, this electricity output is modelled as a negative input of electricity to the system, effectively subtracting the impacts that would have been incurred if that electricity had been produced through conventional means. This captures the substitution effect and models the resulting changes in the broader system expansion.
This methodology is particularly important in consequential Life Cycle Assessment, where the focus is on modelling the actual consequences of decisions. By-product elimination by substitution is a synonym for system expansion, and in input-output economics, the same concept is referred to as the by-product technology model.
